Regulatory Advocacy Update
November 9, 2011
November 10, 2011
Matz Leads Online Town Hall
On Wednesday, National Credit Union Administration (NCUA) Board Chairman Debbie Matz and the senior staff from the NCUA conducted an online town hall discussion, covering issues from corporate assessments to troubled debt restructuring and exam schedules.
Among the highlights were Matz’ reemphasizing her support for increasing the member business lending (MBL) cap (at one point saying she would be all for removing it completely), as MBLs are up 44 percent since 2007 and citing them as an important tool and member service for credit unions.
She also voiced her support for supplemental capital as a tool for credit unions but said that in her visits to Capitol Hill, there has not been much of an appetite for those changes.
Matz addressed the NCUA budget, stating that although it will once again increase, the increase will likely be in the single digits, and that a pay freeze has been negotiated for all NCUA staff. Matz reinforced her previous assertions that the increase in last year’s budget allowed NCUA to hire more examiners and thus better protect the National Credit Union Share Insurance Fund (NCUSIF). The Northwest Credit Union Association (NWCUA) voiced strong opposition to those increases.
With regard to the NCUSIF, Matz stated there will be no premium this year and no premium expected for 2012. Matz did not express concern about the influx of new members and potential changes to capital levels.
Additionally, the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) has a balance remaining in the range of $1.8-6.1 billion, with an estimated premium for next year of between eight and 11 basis points. The assessment will be set in July, with bills to go out in August or September. Matz did emphasize that while credit unions should be budgeting for the assessment, they should not be accruing for it until it is actually paid. When asked about the detailed accounting for the performance of the assets, Matz said that the NCUA is preparing a detailed website that will allow credit unions to closely track the TCCUSF. It should be rolled out in mid-December.
When asked how to measure and quantify credit risk, NCUA officials cited several factors, stating that there is no proprietary credit analytics model used by the NCUA. Factors include:
- Delinquencies (overall rate and severity)
- Charge offs
- FICO scores
- Credit risk in investment products
- Current and prospective risks
Troubled debt restructuring (TDR) is currently on the forefront for the NCUA. They are currently working on revisions to TDRs that will apply to all loans, from mortgages to car and personal loans. They are working to find a way to consistently apply generally accepted accounting principles to revised accounting.
The NCUA did address the credit union service organization (CUSO) proposal put out in July, saying that they were reading and analyzing comments and making changes to the proposal. They plan to target the rule to those CUSOs that perform “risky” activities such as mortgage lending. The rule will still likely require CUSOs doing business with credit unions to report directly to the NCUA on a quarterly basis. This is something the NWCUA fervently objected to and will continue to follow up on.
When asked about the potential to go back to an 18-month exam cycle for well-managed and well-capitalized credit unions, Matz gave a definitive “no,” stating that the 12-month cycle has been advantageous in reducing failures and is something they will stick to for the foreseeable future.
Overall, the call was informative and a refreshing opportunity to interact with NCUA leadership. For more information, contact NWCUA Director of Regulatory Advocacy Jaycee Winn.
Association Calls for Comments on Proposed Changes to NACHA Payments
The Electronic Payments Association (NACHA) has issued a proposal which would allow the same-day clearing of ACH payments. Currently, the originator must allow one day for a debit payment to clear and between one and two banking days for a credit. While the proposal would preserve those timelines, it would also add an ACH system-wide expedited processing and settlement option, which would allow ACH entries to be processed and settled on the same day as origination. There are some concerns about the implementation of this proposal as a requirement and the potential impact on software and staff time.
To view this and other comment calls, visit the NWCUA’s Regulatory Advocacy page.
Decker to go before Senate Banking Committee
NCUA Board nominee Carla Decker is rumored to be going before the Senate banking committee for confirmation on Nov. 17. Recently, confidential information regarding examination issues and the CAMEL score for Decker’s $45 million Washington, D.C.-based credit union were leaked to media. The NCUA has reinforced that the information was leaked illegally and that they will be investigating the source of the leak.
CFPB Update to Congress: The First 100 Days
Last week Raj Date, Special Advisor to the Secretary of the Treasury for the Consumer Financial Protection Bureau (CFPB), testified to the House Financial Institutions and Consumer Credit Subcommittee on the activities and progress of the CFPB since its inception on July 21.
The CFPB’s “Know Before You Owe” effort (to combine the Truth-in-Lending Act and Real Estate Settlement Procedures Act disclosures into a single form) is well underway.
“Our goal with the form is to reduce unwanted regulatory burden for the industry at the same time that we improve the usefulness of information provided to consumers,” Date said.
The CFPB is also beginning a similar effort in partnership with the Department of Education with its Know Before You Owe student loan project. The goal of this project is to help clarify loan commitment and repayment obligations more clearly for students.
Date seemed very aware of the concerns held by smaller credit unions that while they are not under the examination authority of the CFPB, the bureau would still be allowed to take part in exams as they saw fit. Responding to a question from Subcommittee Chairman Shelley Moore Capito, Date said that “the agency is very much aware that compliance costs disproportionately burden smaller institutions and will not abuse its sampling powers.” He went on to add that, “Overall, the CFPB is committed to reducing regulatory burdens on smaller banks.”
The Association is optimistic that the bureau will maintain this mantra and will continue to watch for any issues that may arise.
Date addressed the issue of current regulatory burden, demonstrating an understanding that some rules and regulations are outdated and outmoded. When addressing those regulations that were handed over to the bureau by other agencies, he said, “Changes in technology, market practices, and the legal landscape may have caused some rules to be obsolete, unnecessary, redundant, or counterproductive.”
The CFPB will soon undertake a review of those rules that have been transferred to look for potential updates and streamlining. The CFPB will be inviting public input to identify specific rules that should be a priority for review. The public will be sought to help the bureau evaluate the costs, any benefits and impacts of those rules, and to suggest alternatives that may achieve the statutory goals at a lower cost.
The Association continues to monitor the CFPB as it to ramps up. It is encouraged by its openness and hopes that air of cooperation remains.
All of Date’s remarks can be seen here.
NCUA Launches New Web Site
The NCUA has launched its new website, which has caused some online bookmarks to no longer work. Some parts of the site remain the same, such as the CUOnline application to look up call report data.
The NCUA has also updated its consumer-focused site MyCreditUnion.gov, which is also available in Spanish, making it a great resource for those credit unions that may not have Spanish speakers in-house.
As part of the redesign efforts, the NCUA mentioned the addition of:
- A new “Find a Credit Union” feature;
- A new regulatory archive section to help users research historical regulations;
- An underlying architecture built on a content management system to keep the NCUA current with state of the art technology;
- A direct tie to “NCUA Express,” streamlining users’ access to NCUA updates or information in their email;
- More robust pages featuring photos, activities, and contact information for each NCUA board member and each NCUA office; and
- An improved careers page for potential job applicants.
The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy Jaycee Winn at firstname.lastname@example.org, or at 800.995.9064 x209.